Only Leonard Cohen knows how the market blew up

Leonard Cohen

Image via Wikipedia

Everybody knows the dice are loaded
Everybody rolls with their fingers crossed
Everybody knows that the war is over
Everybody knows the good guys lost
Everybody knows the fight was fixed
The poor stay poor, the rich get rich
That’s how it goes
Everybody knows
–Leonard Cohen

Today I am thrilled to bring you another T/S exclusive: Songwriter, poet and social commentator Leonard Cohen has agreed to translate the statements that came out of last week’s Congressional hearings on the roots of the financial crisis so that you and I can grasp what it is that Everybody Knows. Without further ado, Leonard Cohen:

Everybody knows how the markets crumbled

Everybody knows, the experts say

Everybody loved the housing cash cow

Nobody knew things would end this way

But the roots are plain to see

Just listen to the testimony

And you’ll soon know

What everybody knows.

Greenspan said:

Everybody knows it all began when

The Berlin Wall came tumbling down

Communists threw off their shackles

And  are source of this debacle:

It was the global proliferation of securitized U.S. subprime mortgages that was the immediate trigger of the current crisis. But its roots reach back, as best I can judge, to 1989, when the fall of the Berlin Wall exposed the economic ruin produced by the Soviet system. Central planning, in one form or another, was discredited and widely displaced by competitive markets.

April  7, 2010

Alan Greenspan, former Chairman of the Federal Reserve Bank

The Clinton man then explained:

Everybody knows it was  “powerful factors

Everybody knows it was a natural disaster

Everybody knows there’s no way to restrain

A speeding train

A hurricane …

To name just as few of these factors: market excesses; low interest rates — due notably to large capital inflows from trade surplus countries — which contributed to excessive risk-taking and excessive borrowing…

April 8, 2010

Robert Rubin, former Citibank advisor, Treasury Secretary, and Goldman Sachs CEO

Everybody knows I had no power

Only a limo and a gold-plated Heuer

That’s how it goes

Everybody knows

… My role at Citi, defined at the outset, was to engage with clients across the bank’s business here and abroad; to meet with foreign public officials for a bank present in 102 countries; and to serve as a resource to the bank’s senior executives on strategic and managerial issues…

my agreement with Citi provided that I would have no management of personnel or operations.

Robert Rubin (continued), calling the shots on his $15 million/year deal with Citi

Everybody knows I did my best

Everybody knows we built our nests

With advice from “outside consultants”

Who pushed us into these safe investments


They were the best

Mom and Pop

Could invest with the rest

Everybody knows

That’s how it goes

Citi’s losses from its CDO business did not result from Citi’s fixed income group placing high-risk bets in its proprietary trading business on esoteric, cutting edge trades in a reach for outsized profits. To the contrary,  our primary CDO losses stemmed from client-driven activities in the by Citi of very low-interest yielding, and what was understood to have been super-safe securities that unexpectedly depreciated in value after I left the company–during a period when the country experienced the greatest residential collapse since the Great Depression.

April 7, 2010

Thomas Maheras, former co-CEO, Citi Markets and Banking

And this mole in the dirt

Swore his wards did avert

All the things that went before us

They were subject to a different force

But everybody knows

Everybody knows

That if your testimony runs 381 pages

No one will read it,  no matter how outrageous

Indeed, if it were true that federal preemption caused the subprime mortgage crisis by preventing states from applying more rigorous lending standards to national banks, one would expect that most subprime lending would have migrated from state regulated lenders to national banks. One would also expect that all bank holding companies engaging in these activities that owned national banks would carry out the business through their national bank subsidiaries subject to federal preemption, rather than their nonbank subsidiaries that were subject to state law. But, as described below, neither of these conjectures is accurate: the overwhelming majority of subprime lending was done outside of national banks in entities that were subject to state law, and several large bank holding companies conducted all or most of their subprime mortgage lending in nonbank subsidiaries rather than their national bank subsidiaries

John C. Dugan,  Comptroller of the Currency, April 8, 2010, perpetuating the myth that the Federal Reserve, not his agency, fell down on supervision

Fannie Mae declared:

Everybody knows

Our job was to invest

In this horrible subprime mess

It was a national policy

To put people in homes risk-free

…Congress and the executive branch (under various administrations) required the GSEs to take increasingly larger roles in fostering homeownership and affordable housing for underserved populations. This goal increased  sharply, to the point  that in 2004, 50%  of the GSE’s business was required  to be below median  income levels,  and this increased  to 57’% by 2008, despite a decline in the overall market. In addition,  in the realm of public and political opinion,  the companies were challenged to support a variety of initiatives intended to increase home ownership on a local basis.

Daniel H. Mudd, former president and CEO, Fannie Mae, April 9, 2010

And everybody knows,

Everybody knows

Hell hath no fury

Like a regulator spurned.

“The Fed utterly failed to prevent the financial crisis,” she said. “The Fed and the banking regulators failed to prevent the housing bubble. They failed to prevent the predatory lending scandal. They failed to prevent our biggest banks and bank holding companies from engaging in activities that would bring them to the verge of collapse without massive taxpayer bailouts.”

Brooksley E. Born, former head of the CFTC, addressing Alan Greenspan, April 7, 2010

That’s how it goes

Everybody knows.

I hope this clears up what happened on Capitol Hill last week. And now, here is Rufus Wainwright belting out what we all know.

[youtubevid id=”zUTBESqnnkg”]

(Here’s a different link to a thrilling live performance by Wainwright of Everybody Knows; YouTube coded the video to prevent others from embedding it into their posts.)


9 thoughts on “Only Leonard Cohen knows how the market blew up

  1. Nancy… Incredibly captivating work. You perspective on this titanic problem and mastery of media tools has produced a dazzler. On the bright side (quoting an age-old adage): The bigger the problem, the bigger the opportunity for improvement. If BHO has any political skills approaching those of WJC, he will seize this opportunity. Otherwise, he’s a 4-year president. You don’t get mulligans in this game. Time is running low.

  2. Thanks, Leon, for your comments. I agree: This should be an opportunity for meaningful change. The hearings on the Hill made me fell less than optimistic that this would happen.

  3. Pingback: Tweets that mention Only Leonard Cohen knows how the market blew up - Nancy Miller - The New Wall St. - True/Slant --


    You had the chance to post Leonard Cohen singing the song HE WROTE and you put up Rufus Wainwright instead???

    Whiny little boy voice instead of the most magnificent deep voice AND songwriter alive today? What the hell were you thinking?


  5. I actually find Rufus’ voice painful. He ruined Hallelujah, and that’s difficult to do. He needs a couple more decades on him before he can sing these kind of songs with the right feeling. Only Bob Dylan could do it as a young man.

  6. Pingback: Tweets that mention Only Leonard Cohen knows how the market blew up - Nancy Miller - The New Wall St. - True/Slant --

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